 Parker Hannifin
Corporation Quarterly Earnings Release 3rd Quarter FY 2008 April 22, 2008 Exhibit 99.2 |
| Parker Hannifin
Corporation Quarterly Earnings Release 3rd Quarter FY 2008 April 22, 2008 Exhibit 99.2 |
| Slide 2 Forward-Looking Statements Forward-Looking Statements: Forward-looking statements contained in this and other written and oral reports are
made based on known events and circumstances at the time of release, and as
such, are subject in the future to unforeseen uncertainties and risks. All
statements regarding future performance, earnings projections, events or developments are forward-looking statements. It is possible that the future
performance and earnings projections of the company and individual segments
may differ materially from current expectations, depending on economic
conditions within both its industrial and aerospace markets, and the company's ability to maintain and achieve anticipated benefits associated with announced
realignment activities, strategic initiatives to improve operating margins,
and growth, innovation and global diversification initiatives. A change in
economic conditions in individual markets may have a particularly volatile effect on segment results. Among the other factors which may affect future performance are: changes in business relationships with and purchases by or from major customers or suppliers, including
delays or cancellations in shipments or significant changes in financial
condition; uncertainties surrounding timing, successful completion or
integration of acquisitions; threats associated with and efforts to combat terrorism; competitive market conditions and resulting effects on sales and pricing;
increases in raw- material costs that cannot be recovered in product
pricing; the company’s ability to manage costs related to employee
retirement and health care benefits and insurance; and global economic factors, including manufacturing activity, air travel trends, currency exchange rates, difficulties
entering new markets and general economic conditions such as inflation,
interest rates and credit availability. The company makes these statements
as of the date of this disclosure, and undertakes no obligation to update them. |
| Slide 3 Non-GAAP Financial Measure This presentation reconciles sales amounts reported in accordance with U.S. GAAP to sales amounts adjusted to remove the effects of acquisitions made within the prior four quarters as well as the effects of currency exchange rates on sales. The effects of acquisitions and currency exchange rates are removed to allow investors and the company to meaningfully evaluate changes in sales on a comparable basis from period to period. |
 Slide 4 Discussion Agenda 3 rd quarter highlights Key performance measures & outlook Questions & answers Closing comments |
 Slide 5 Third Quarter and Q3-YTD Highlights Record Quarterly Sales, Earnings, and Cash Flow FY 2008 projected to be another record year International strength offsetting challenging North American environment Q3 Sales growth 14.4% - 4.3% organic Earnings per diluted share up 25.2% in Q3, 17.4% Q3-YTD Total Parker Orders up 9% in Q3 |
 Slide 6 Financial Highlights Diluted Earnings per Share 3 rd Quarter and YTD as of March 31 $3.45 $4.05 $1.49 $1.19 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 Q3 FY08 Q3 FY07 Q3 FY08 YTD Q3 FY07 YTD |
 Slide 7 Influences on 3 rd Quarter Earnings Sales increased 14.4% - 4.3% organic Segment operating income increased 21% Fewer shares outstanding — 5.3 million fewer diluted shares in FY08 Offset by: Lower No. America and Aerospace margins Higher Interest expense Higher Other expense |
 Slide 8 Financial Highlights Sales – 3 rd Quarter and YTD as of March 31 Dollars in millions FY2008 % Change FY2007 FY2008 % Change FY2007 Sales As reported 3,183 $ 14.4 % 2,781 $ 8,799 $ 12.2 % 7,844 $ Acquisitions 111 4.0 % 247 3.1 % Currency 172 6.1 % 382 4.9 % Adjusted Sales 2,900 $ 4.3 % 8,170 $ 4.2 % 3rd Quarter YTD |
 Slide 9 Influences on Sales Continued Industrial end market strength International – Asia Pacific – Latin America – Europe Distribution Aerospace Acquisitions Emerging markets |
 Slide 10 Segment Reporting Industrial North America Dollars in millions FY2008 % Change FY2007 FY2008 % Change FY2007 Sales As reported 1,087 $ 3.7 % 1,048 $ 3,084 $ 2.5 % 3,009 $ Acquisitions 6 0.6 % 51 1.7 % Currency 8 0.7 % 18 0.6 % Adjusted Sales 1,073 $ 2.4 % 3,015 $ 0.2 % Operating Margin As reported 148 $ 147 $ 445 $ 434 $ % of Sales 13.6 % 14.0 % 14.4 % 14.4 % 3rd Quarter YTD |
 Slide 11 Segment Reporting Industrial International Dollars in millions FY2008 % Change FY2007 FY2008 % Change FY2007 Sales As reported 1,346 $ 32.2 % 1,018 $ 3,624 $ 28.6 % 2,818 $ Acquisitions 92 9.0 % 174 6.2 % Currency 151 14.8 % 334 11.8 % Adjusted Sales 1,103 $ 8.4 % 3,116 $ 10.6 % Operating Margin As reported 217 $ 140 $ 576 $ 390 $ % of Sales 16.1 % 13.8 % 15.9 % 13.8 % 3rd Quarter YTD |
 Slide 12 Segment Reporting Aerospace Dollars in millions FY2008 % Change FY2007 FY2008 % Change FY2007 Sales As reported 470 $ 7.7 % 436 $ 1,328 $ 7.0 % 1,241 $ Acquisitions 14 3.2 % 22 1.8 % Currency 3 0.6 % 7 0.5 % Adjusted Sales 453 $ 3.9 % 1,299 $ 4.7 % Operating Margin As reported 68 $ 66 $ 178 $ 203 $ % of Sales 14.5 % 15.2 % 13.4 % 16.3 % 3rd Quarter YTD |
 Slide 13 Segment Reporting Climate & Industrial Controls Dollars in millions FY2008 % Change FY2007 FY2008 % Change FY2007 Sales As reported 280 $ 0.5 % 278 $ 762 $ (1.8)% 776 $ Acquisitions Currency 10 3.6 % 23 3.0 % Adjusted Sales 270 $ (3.1)% 739 $ (4.8)% Operating Margin As reported 18 $ 19 $ 39 $ 57 $ % of Sales 6.5 % 6.9 % 5.1 % 7.3 % 3rd Quarter YTD |
 Slide 14 Parker Order Rates Excludes Acquisitions & Currency 3-month year-over-year comparisons of total dollars, except Aerospace Aerospace is calculated using a 12-month moving average FY08 FY07 Total Parker 9 % + 2 % + Industrial North America 2 % + 2 % - Industrial International 11 % + 11 % + Aerospace 28 % + 2 % + Climate & Industrial Controls 1 % - 4 % - Three months ending March |
 Slide 15 Balance Sheet Summary Cash Working capital Inventory Accounts receivable Pensions – FAS 158 |
 Slide 16 Strong Cash Flow Cash from Operating Activities 3 rd Quarter YTD $537 $864 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 FY08 FY07 |
 Slide 17 Financial Leverage Debt to Debt Equity 26.1% 16.0% 18.0% 20.0% 22.0% 24.0% 26.0% 28.0% 30.0% 32.0% 34.0% 36.0% 38.0% FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 Goal - Not to exceed 37% over the cycle |
 Slide 18 FY 2008 Earnings Outlook Assumptions Segment Sales & Operating Income FY 2008 Sales change versus FY 2007 Industrial North America 3.7 % -- 4.1 % Industrial International 25.0 % -- 25.4 % Aerospace 7.3 % -- 7.7 % Climate & Industrial Controls (2.8)% -- (2.4)% FY 2008 Operating margin percentages Industrial North America 14.1 % -- 14.5 % Industrial International 15.7 % -- 16.0 % Aerospace 13.6 % -- 14.0 % Climate & Industrial Controls 5.5 % -- 5.9 % |
 Slide 19 FY 2008 Earnings Outlook Assumptions below Operating Margin Corporate Admin + 2% to + 1% vs. FY 2007 Interest Expense + 26% to + 23% vs. FY 2007 Other Expense (Inc.) + 29% to + 24% vs. FY 2007 Tax Rate 29 % |
 Slide 20 Earnings Outlook – FY08 Low High Diluted earnings per share 5.40 $ 5.60 $ |
| Slide 21 Questions & Answers... |
 Appendix
Income Statements 3 rd Quarter 3 rd Quarter YTD |
 Slide 23 Income Statement – 3 rd Quarter Dollars in millions % of Sales % of Sales Net Sales 3,182.5 $ 100.0 % 2,781.0 $ 100.0 % Cost of sales 2,447.2 76.9 % 2,163.8 77.8 % Gross profit 735.3 23.1 % 617.2 22.2 % S, G & A 347.0 10.9 % 308.6 11.1 % Interest expense 25.5 .8 % 22.4 .8 % Other expense (income), net 5.0 .2 % (8.7) (.3)% Income before taxes 357.8 11.2 % 294.9 10.6 % Income taxes 102.4 3.2 % 85.6 3.1 % Net income 255.4 $ 8.0 % 209.3 $ 7.5 % FY 2008 FY 2007 |
 Slide 24 Income Statement – 3 rd Quarter YTD Dollars in millions % of Sales % of Sales Net Sales 8,798.9 $ 100.0 % 7,843.7 $ 100.0 % Cost of sales 6,763.7 76.9 % 6,049.2 77.1 % Gross profit 2,035.2 23.1 % 1,794.5 22.9 % S, G & A 990.9 11.3 % 893.4 11.4 % Interest expense 74.0 .8 % 61.9 .8 % Other (income), net (1.4) (.0)% (22.2) (.3)% Income before taxes 971.7 11.0 % 861.4 11.0 % Income taxes 274.8 3.1 % 248.5 3.2 % Net income 696.9 $ 7.9 % 612.9 $ 7.8 % FY 2008 FY 2007 |